Issue 112 - The fund that likes to say EIS

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The fund that likes to say EIS

The launch of The Whisky Trading Company (WTC), the first public whisky investment scheme, has received widespread UK press coverage. Investors who can part with the £10,000 minimum investment buy shares in the enterprise, not ownership of any whisky bottles. The fund manager trades whiskies with the hope of paying investors above 15 per cent per annum. This one operates as an Enterprise Investment Scheme (EIS), a higher risk form of investment governed under strict rules by HMRC where tax incentives are wrapped into the product.

Companies financing new movies, solar energy, diamonds, and fine wine have all used EIS to raise investment. EIS tax relief comes at 30 per cent of the stake set against an individual's tax liability (up to £1 million), providing shares are held for three years. The money must be used for its stated purpose within two years of shares being issued. The tax incentives for investors can be lost if companies fail to follow EIS rules. The WTC press release was replete with past performance figures from whisky auctions and leans on founder David Robertson's credentials with The Dalmore where the former Whyte & MacKay rare whisky director positioned the brand towards investors with a succession of high priced releases. If you are contemplating investing, weigh up the risks and performance forecasts of a whisky EIS against relying on your own knowledge and maintaining full control.